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Our next guest is Bob Murphy from the Mises Institute, Mises.org.
He's the author of The Politically Incorrect Guide to Capitalism and The Politically Incorrect Guide to the Great Depression and the New Deal.
Welcome back to the show, Bob.
How are you doing?
Thanks for having me, Scott.
I'm doing well.
Well, good.
I appreciate you joining us today.
So first of all, give me the basics, sixth grade level here for my sake.
What is quantitative easing?
That sounds like a fancy word for something bad.
Right, yeah, whenever they use big words, a lot of syllables, you know it's bad.
So traditionally when the Fed would do something, they would cut interest rates.
Like if you think back before this crisis and the newspaper, it was all the Fed met today and they lowered interest rates from 5% down to 4.75% or whatever.
So that was how they used to do things.
But with this crisis, by the end of 2008, that interest rate, the short-term what's called the federal funds rate that they normally would tinker with, that was already pushed down to basically zero.
So they kind of couldn't do that anymore and the economy was still awful.
So they said, well, what can we do?
So then they switched to announcing to the public how much money they were going to spend on stuff.
So they would say, oh, we're going to do whatever, $300 billion worth of purchases of treasuries or mortgage-backed securities.
So that is how a lot of economists explain what is this, why they're using the word quantitative easing.
It means the Fed is doing what it can to help us, but now we're talking about that action in terms of how much of a quantity of what they're buying.
Whereas before, they never talked about how much money they were spending.
They just talked about what they were going to do with interest rates.
Right, okay.
So in other words, it's fiscal policy from the Fed.
It's not just monetary policy anymore.
Right.
It's spending policy.
Yeah, I think that's true.
Some mainstream economists might disagree with you, but yeah, I think that that's right, that they're – what's driving – or part of what's driving it is they know the government needs to keep running huge or wants to keep running huge deficits to pay for all of its wonderful programs, and they realize the Fed has to start absorbing all that stuff or else they're not going to find enough lenders.
Now, they're on QE3, which means that they've done this twice.
Now, on the first and second times, did they say that was the only time they were going to have to do it, or did they say – did they always kind of leave open the possibility that they're going to have to keep doing this?
Yeah, if I understand where you're getting at, that's a great question, and that's why I don't understand why everyone is freaking out so much.
Not even freaking out, but I don't see why this latest announcement is that big a deal compared to the previous ones, because you're right.
It wasn't that the Fed before said, okay, we're going to buy X amount worth of these things, and then we're done, come hell or high water.
No, they always said, of course, in the context – and the implicit assumption was, and then when this is done with, we're going to reevaluate, and if the economy is still awful and we still think there's need for policy accommodation, then we might buy some more.
So the only real difference with this latest announcement is that they're basically saying, we're going to keep doing this until we need to stop, whereas before it was more of them saying, we're going to do this, and then if that doesn't work, maybe we'll do something else.
So this is really – it's almost like just a little change in the nuance as far as I'm concerned.
Does this really help anyone other than Wall Street bankers?
Well, the – European bankers.
The U.S.
– yeah, the U.S. federal government also I think it helps because it's paving the way for them to keep buying treasuries too.
But you're right, I mean this – I don't – I'm still in shell shock.
I mean it doesn't surprise me that the Fed did this.
What surprises me is how many analysts, even supposedly free market guys and gals, are just saying how great this is.
I mean the Fed is coming out and saying we are going to be spending $40 billion a month indefinitely until the economy is fixed buying mortgage-backed securities.
I mean they're targeting a very particular type of security, and you would think generally free market economists might say, well, wait a minute.
That's kind of weird that the Fed is picking a particular sector of the economy that they're going to try to help, and moreover one that kind of blew up last time and wrecked the whole world economy.
So why are they trying to resuscitate the housing sector when that's exactly what they screwed up last time?
All right, now, when I talked with you in the end of 2008 and the beginning of 2009, the danger was, according to you, if we let the government print all this money, it's going to cause massive price inflation, not just in some sectors, but kind of across the board, right?
And this was the danger, and we've had – I'm not saying that grocery shopping is getting more and more difficult all the time, because I know it is.
But on the other hand, we haven't had a real crack-up boom where everybody has to just go and invest in bedpans or any other actual material object, because the currency is becoming so worthless so rapidly either.
So were you wrong, or we're just waiting for you to be right to kick in, or what's the deal?
Well, I hope you're sitting down.
So I'm an economist.
I'm going to say, yeah, I made some predictions that were wrong.
So that is true.
That is true.
I thought we would see more obvious effects of price inflation by now than we have seen.
So having said that, I mean, the government's official numbers I think are crazy.
When you go – I mean, little things, like when you go to the grocery store now, I just noticed that there's no employees around.
Like now, just about everyone, at least the stores where I go to, you do your self-serve checkout, you know what I mean?
They have those computers set up, and you bag your own groceries and everything.
And so the fact that the prices – and things like the paper towels you buy now are really thin, and the cereal boxes you buy, the cardboard is really thin compared to what they were five years ago.
Or when I go to restaurants now, I notice the portions they give are a lot smaller.
Now, for me, that's a good thing because I'm trying to lose weight.
But my point is there's lots of ways that businesses have actually reduced the quality of what they're providing to deal with the fact that their input prices really have skyrocketed.
I mean, commodities really did go way up in price starting from early 2009 when the Fed started doing all this stuff.
Because if they raise their retail prices too much, then people will just change their habits and say, forget you then.
Right.
I mean, if you think about it, this might be a crude way of thinking it, but in a sense it's like the Fed has been pumping in trillions of dollars into one part of the economy, and it's hitting all the big bankers and basically a bunch of rich people.
And then the average guy is unemployed or he's worried about losing his job, and people are all broke and suffering from credit card debt.
So what's happening is the prices of inputs are sky high, but the final consumer on many retail goods, they're broke, and so they're not spending as much and they're really pinching pennies.
And so the businesses that are caught in between that, they see their input prices going way up, but they know if they try to just pass that right on the consumer, they're not going to sell anything.
And so they're trying to come up with ways to deal with these higher input prices without just giving sticker shock to their final customer.
But even having said all that, food and energy prices really are higher than they were before, but the point is the government's official statistics make it look like, oh, it's not that bad, when I think there's lots of ways businesses are adapting to this that aren't being picked up in the official statistics.
Well, I wonder, too, if maybe you misunderestimated the depth of the black hole that they were pouring all this money into, because after all, if they built up this massive inflationary bubble of malinvestment, that's a lot of deflation that has to happen.
That's a lot of bankruptcies that are going to kick in that are not going to be bailed out, that are not GM or JPMorgan Chase.
And so that's a lot of people regrouping, not taking out loans, but stopping even trying taking out loans.
Right now they're experiencing the exact opposite economic effect in their business.
So at the same time that they're inflating from the top, everything's deflating at the bottom, right?
And then that's shutting down the multiplier effect of the banks loaning out new money all the time.
Right.
I think what you just said is true, but I'm just saying I don't want to give myself a pass.
You're right.
On your show and other places publicly, when Bernanke started doing all this crazy, what I thought was crazy stuff back in 08, I was thinking, even accounting for all that, we were going to see bigger effects by this point.
So I'm trying to just be honest and say, yeah, like you say, misunderestimated.
But yeah, you're right, part of what's going on, part of the reason that we haven't seen this gasoline hitting $20 a gallon and that kind of thing is that, yeah, a lot of that new money that got pumped into the banking system is just sitting there because the bank's balance sheets were shot.
They don't see any good economic prospects out there.
I mean, the economy is still awful.
And so they're content just to let those reserves sit there on deposit with the Fed.
The Fed is paying them interest on excess reserves.
So I think your listeners probably all know that, but just to reiterate, while everyone's telling us, oh, we're trying to get them to lend to small businesses and that's what we're doing, we don't care about the big fat cats, we're just doing this all for the little guy, the Fed is simultaneously literally paying banks to not lend that money out.
I mean, that's kind of crazy.
And yes, a lot of that is just sitting there in excess reserves and then they're also just taking what they do lend and basically giving it to the government.
Now, why is the Fed paying them to keep their reserves there?
Is Ben Bernanke afraid that you're right?
The best way I've come to model Ben Bernanke is to say he is going to do what will help the big bankers and then his job, the reason they picked him, is he can come up with some story in terms of mainstream macroeconomics and financial economics to try to justify that.
So he can be a Keynesian all he wants when it comes to making all the banks whole, but then when it comes to Main Street, he will actually – he knows better than to have the banks actually loan all that money out to Main Street because of the massive inflation it will cause.
So he's paying them to just keep the money.
As long as they're whole, we can all go and screw ourselves.
And actually, we're probably better off that way because if we had the inflation that would really hit, if they did start loaning out all that money, we would all be even worse off.
Right.
I mean, I think that's part of it.
I don't know exactly why they're doing it.
What I am saying though is they're content with the current situation because the banks are slowly recapitalizing themselves.
The banks, the ones that were getting all this money from the Fed and from TARP and everything, they right now are slowly repairing their balance sheets because they're earning income just holding tight because they're sitting on all these excess reserves, they're earning excess interest and so on.
And so that's fine as far as the Fed is concerned.
That's a nice holding pattern, that the banks are slowly getting better, their balance sheets are getting repaired, and who cares if the rest of the economy is awful.
You're right.
If they didn't pay interest on excess reserves and then the banks started lending that stuff out, it might quickly get out of control and why would they risk that?
Because right now what's important to them in my view is getting the bankers back on their feet and that's what they're doing.
So why would they tinker with that?
Right.
Yeah, and then at least it's in a really bad position when Austrian arguments to the side, this is basically a conservative policy.
The only argument if they were to ever argue about this on TV would really be from a more liberal point of view that would say we need to get that money out there.
It's not fair that only the rich people get it.
We've got to increase loans.
Yeah, if I understand what you're getting at, you're right.
It is a bit odd in terms of quick sound bites or whatever.
When we complain about them paying interest on excess reserves and bring up the point that you know that money's not getting out there, my point in bringing it up is not to say that I think it would be good if all that trillion plus dollars got lent out and that, oh, we've just got to get the money in the hands of the business people.
It's just saying that you can see that their own rationale for why they're doing what they're doing is crazy, that they're doing it for some other reason because if they actually believed what they were saying, they wouldn't also counteract their own policy by paying banks to not lend the money out.
All right, now, when the Democrats held their convention, the president, I guess, took credit for participating and voting for the bailouts when he was still in the Senate and then also bailing out General Motors and all the stimulus and whatever and said that, you know, and they even, I think, shared a little bit of credit with the Bush administration that they did what was necessary to prevent the economy from imploding.
I hear this all the time, actually, not just from the politicians, but the news hairdos on TV.
You know, they always talk about, well, gee, it is kind of unfair that the banks get all these benefits, but, you know, the government did what they had to do or the entire economy would have completely self-destructed if they hadn't have saved these banks.
And so I wonder whether you think that's really true.
What do you think it would have looked like if, say, for example, George Bush just couldn't, for whatever reason, there was a Ron Paulian coalition in the Congress that could not be budged, that would not allow TARP, that would prevent the Fed from creating all this money to bail out all these banks.
And if Citigroup and JPMorgan Chase and all of the worst ones of them all collapsed, then what?
We'd all starve to death, right?
Aren't they right that all those banks need to be bailed out there, Bob, because doesn't Chase feed us?
Yeah, and what's funny is that actually all it would have required for the policy recommendation or a conclusion that you're talking about is that these so-called free market Republicans actually did what their rhetoric suggests, you know, that if they actually didn't believe in corporate welfare and believe in the free market and not bailing people out.
Well, actually, at the time, the Republicans were almost all for it, no questions asked, whatever George Bush says, because he's the great leader, and it was the Democrats who originally stood against it and voted against it.
But then they got offered a million dollars each to change their votes, and they're all such sellouts and traitors for a little bit of pork barreling each.
They sold us all out for $800 billion, which of course was only chump change compared to what Bernanke was creating across the street.
You're kind of a cynical guy, Scott, but yes, I think you're exactly right about the big picture.
So what would have happened is they weren't exaggerating in a sense.
Yes, certain big Wall Street firms would have gone down.
It wasn't just Lehman that was vulnerable.
They were all vulnerable, and they would have gone down, and things would have been awful, I would say, for six to eight months.
But it's not that tractors would have disappeared.
It's not that the ability of programmers would have gotten sucked out of their head because they didn't know how to make apps for the iPhone or something.
The actual real wealth of the world would not have gone anywhere.
It just would have been a massive redistribution of who owned what, and all of these big banks would have gone bankrupt, and then their assets would have gotten reallocated to the firms that actually were more responsible during the housing bubble years.
And so there would have been a painful readjustment process, but I think it would have taken, let's say, six to eight months, and then you would have hit rock bottom.
And from that point on, you would have had a solid recovery, and the main difference would be the people, the firms, that were now in control of the financial sector, making major decisions about where credit flows, would be the ones who recognized the housing bubble was a bubble and stayed clear of that.
They wouldn't have been jumping in for short-term gain at the time, whereas the reason so many of these big Wall Street banks were so vulnerable in September of 2008 was because they had been playing dangerously.
They had been doing all this stuff that they knew, well, gee, if this housing bubble collapses and these things go under, we're going down, and they just said, well, we don't care.
We're going to be earning these bonuses while we can, while the getting's good, and, hey, the government will bail us out if the push comes to shove.
Right.
Well, and not just that, but then prices kind of across the board would more accurately reflect consumer preferences rather than just where the inflationary bubble has been pushed.
Yeah, you're exactly right with that, too.
And that partly goes back to what you were saying before.
Part of what was happening here and why I think you haven't seen the absolute level of prices quoted in dollars going through the roof is that had the Fed stood back and done nothing back in 2008, prices would have fallen and stayed down.
And so the people who actually were living on a fixed income, they would have seen their standard of living go way up.
But what instead happened is the Fed did inflate, and so instead of prices falling 10% across the board, instead they rose 2% or 3%.
And I feel like I'm living in a twilight zone because the headlines say, oh, good, housing prices are up.
At the same time, I already know that there's 16 million unoccupied houses in America and probably 20 million homeless people, and what in the hell are they doing?
That's not right, man.
You don't have to be an economist to know that that ain't right.
Right.
It is odd that when it comes to prices, I mean the conventional wisdom is if gas prices go down, that's a good thing except for like a global warming type argument where people want gas to be expensive so people don't drive.
But generally speaking, people say, oh, yeah, if gas prices go down or food prices go down, that's a good thing because that's easier for consumers.
But you're right.
For some reason, when it comes to housing, everyone seems to think, no, the way you make Americans richer is to make it more expensive to live somewhere.
And that's just a weird way of looking at the world.
Yeah, it's crazy.
I learned when I was a little kid, well, my dad, he's smart, and he taught me that when you buy a new car, the moment the front tire hits the street, the moment you cross from the dealership parking lot to the public right-of-way, your car loses half its value.
Tough.
That's how it is because value is determined by how bad somebody wants it, and that's just the way it goes.
Well, why should it be any different with a house?
The more you live in it and stink it up and the more it gets rained on, the more valuable it gets, and the more houses are built nearby it, the more valuable it gets, that doesn't make any sense unless you live in a booming, well, dot-com bubble in Austin or something like that, right?
If it's a dot-com bubble that's fueling your housing bubble, then that makes sense.
Or an oil bubble that's fueling your housing bubble, then there's at least an explanation.
Otherwise, it's just a Greenspan money bubble that's fueling your housing bubble.
Yeah, I think that's right.
Part of what has happened is, for whatever reason, Americans now view their house as an investment and not as just a durable consumer good that provides a flow of housing services over time, but they view that as a major asset.
I think part of that is because, especially since the dollar got taken off the gold completely in 1971, Americans need to have their wealth in something that's going to respond with the general fall in the value of the dollar, and so that is a place to sort of store your wealth.
Well, at least if I have a house, that will rise in price.
Everything else gets more expensive, too, so at least I'll be able to keep up somewhat with general price inflation.
It's understandable how Americans got herded into this mentality, but nonetheless, it is kind of crazy when you step back and think about it that for some reason official government and Fed policy is we want to make it more expensive for people to live somewhere, when right now part of the social problem plaguing this country is all these kids with college degrees are moving back in with their parents because they can't even get a job, and so how are we helping that part of the problem by making it more expensive to buy a house?
By the way, you just reminded me of something there.
A friend of mine who's, I think, like an anarcho-leftist, so like a Bakuninist or something like that, right?
Not a Marxist, but very, very kind of far left and very critical of capitalism type of a guy, he said to me something, and I probably won't do justice to his argument either, so apologies to all anarcho-leftists in advance here, but he was saying that, well, you know, capitalism in general, the American version of whatever we got, mixed economy, whatever it is, or even a free market, it requires, because all businesses require regular growth at 3% or whatever, otherwise they go bust.
They've got to not just break even.
They've got to do increasingly better all the time, and so basically it's an unworkable system, and the only way to prop it up and make it work is the military-industrial complex and the housing bubble, and that's why it's been the housing game really even since the 30s and especially since the Second World War, is if the government can continually push people into housing, then it keeps the growth rate at somewhere right around 3%, and anything less than that, the whole damn thing will break down.
So is there any truth to that, author of, and I forget whether you address this, maybe you do, in The Politically Incorrect Guide to Capitalism.
I don't address that particular claim in that book.
I had a Mises Daily article on that kind of thing a while ago.
So from a purely theoretical point of view, no, I don't think it's true that if interest rates are positive, that means that people have to keep going deeper into debt and that sort of thing.
I don't know if this is exactly what you're talking about, but I hear a lot of times people say, hey, if the banking sector is lending us money and then we have to pay it back plus interest, that's a mathematical impossibility, and so that's why we have to keep going deeper and deeper into debt.
Oh yeah, that's kind of some anti-Fed crankery I'm familiar with from before I found the Mises Institute, actually.
Yeah, so that particular, I mean, so it is true that our system is screwy and that a lot of the money that's in the system is tied to debt, and that if people paid off debt, the overall quantity of money would shrink.
And so that's kind of a weird system, and so there are forces at work to try to keep people in debt because it would be real deflationary, and so people who are afraid of deflation don't want Americans paying off their debt and they don't want the federal government to start running surpluses.
So that part is true, but in terms of the broad picture, I mean, you could imagine a free society with sound money, gold money or whatever, and private banks that weren't getting bailed out by the government, and you could have genuine real economic growth and there wouldn't be this need to push people into housing or whatever.
But it's certainly true that the system we're in right now, they have to keep inflating and keep propping up certain things, and if they stop doing that, it's not like there could just be a graceful plateauing.
The whole thing would come crashing down.
But is there anything to the argument that if they didn't have these big projects like the shipbuilding industry and the military airplane building industry and the housing industry that the government could direct these vast amounts of capital into, that they wouldn't be able to, that they need to be able to, and they would not be able to guarantee a more or less economy-wide 3% rate, and that without something near there, the whole thing will stop going?
I'm not sure if it was all based on that same kind of debt thing that you were talking about, where you're putting everybody on artificially cheap money instead of saving their own, which I think is a different argument.
But anyway, I probably don't know this argument well enough to state it right in the first place, so I'm not a very good devil's advocate on it.
The point was just people, just left to their own devices in a sound money, free market economy, they won't be able to keep up a 3% rate of growth all the way across the board all the time, and then it just won't work, and I'm not really clear on why supposedly it won't work.
Well, I do agree that if the Fed stopped inflating and the government all of a sudden started running a balanced budget and didn't increase taxes, they cut their spending to just be in line with tax receipts, there would be a crash, and the official statistics would show that, oh my gosh, GDP plummeted and unemployment would go up and all that kind of stuff.
But I think that would be a good thing in the long run, that that would just reallocate what the real resources were going towards, and they would start going towards things that consumers actually wanted, and private businesses would start investing.
So in other words, the steel and the labor and whatever else used to go into the shipbuilding for the Navy would, after this reallocation, end up going into private vehicles or computers or something like that in the private sector.
And so it's not that the economy would permanently be stuck in this rut because all the government's not spending enough.
But yeah, there would be this temporary crash, and that would be a painful readjustment, so people could, during that period, truthfully say, oh, because the government stopped spending, we had this awful economic catastrophe.
But I think that would be a good thing in the long run, because otherwise you're just wasting those resources.
There's no point in being employed if you're just putting steel into something like a battleship that actually isn't serving the social good.
Right.
I actually have a couple of articles here, Bob.
One of them is from antiwar.com.
White House claims defense cuts deeply destructive to the economy.
And then this one says, U.S. to spend at least $350 billion on nuke upgrades.
$350 billion upgrading 5,000 nuclear weapons.
So to the Obama administration, this is all stimulative.
This is all good for the economy.
Cuts are bad for the economy.
Well, and what's funny is people have been justly hammering Mitt Romney, because didn't he say basically the same thing when he was criticizing Obama for...
Right, he's running ads like that.
Yeah, so it's...
Yeah, even allegedly conservative Republicans, when it comes to military spending, all of a sudden see the virtues of government creating jobs by spending money.
So, yeah, I mean, it's the same thing.
I mean, the standard problem with government is paying people to dig ditches and fill them up, that if what you're doing is not something that's socially useful, then it's just a waste of scarce resources.
They could be deployed elsewhere.
And so it is true there would be a short-term pain in the sense that if the government splashed the military budget in half, all those defense workers would get laid off and they'd have to go do something else or the people in the armed forces would get laid off and they'd have to go find other work.
But the point is you don't want people engaged in operations that aren't actually producing something that's useful to society.
And so if somebody thinks that what the government's doing with the military is good, well, then they could justify it.
But if you don't actually like what's going on with the U.S. military, then it's not a good thing to say, well, at least they're keeping those people employed, that they could get employed elsewhere if the government released those resources.
Yeah.
Well, and what's funny is it's not just that they've wasted trillions of dollars on all this empire just in the last dozen years, but they also created that giant bubble, as we've discussed before, to help disguise the pain and the cost of all those wars.
And so your time on the unemployment line is your price of the Iraq war rather than them raising your taxes and admitting to you $87 billion is just the beginning, maybe, kind of thing at the start of the war, which would have turned people against it.
And so people come home from the war, now they can't get a job because the economy's in the doldrums because all the money was wasted on the war.
And then the only place anybody can get a job is making weapons for war because everything else has gone out of business.
And then people say, well, don't take that from me.
I mean, what would happen to Fort Worth if they stopped making F-16s?
Fort Worth would be hurt.
A lot of people in Fort Worth would be hurt.
All the businesses, because it's been there for so long, all the businesses built up around Lockheed there, it would be a major disruption for that money to be reallocated to somewhere else.
And in fact, in all things being equal, if it did get reallocated to making a new factory somewhere, it would be in China.
It wouldn't even be here anyway.
So people are desperate for their Lockheed job.
Please don't take my Lockheed job.
It's all I've got left, Bob.
Well, unfortunately, a lot of what you're saying there is exactly right, that the way the system produces outcomes, people do have all their options taken away, and so they end up becoming dependent on the government.
And that's why people are so terrified about them cutting Social Security or Medicare is because the government has taxed them and regulated them and done so much that people really don't have enough left over at the end of the month to put away for their own private pensions and whatever.
They need Social Security to just make it through.
So it's this vicious cycle where people become dependent on the government and then it just reinforces it, and so then they go ahead and prove for bigger projects like you're saying, because it's inconceivable.
Oh my gosh, if you cut all the military spending, yeah, this would be a ghost town.
Whereas if it weren't for all those hundreds of billions over the years getting diverted into the military-industrial complex, then you would see all these other opportunities that would be out there.
And so it wouldn't terrify people, because they would know, oh, I can go get a job over here or over here.
But right now, all that money and resources has already been sucked away, and so it looks like the only thing left is to go work for the government, either directly or indirectly.
Ridiculous.
To think, America, you know, George Washington and red, white, and blue and freedom and all that stuff, and this is how it ends?
We just, you know, not just suicide, but self-cannibalism.
You know, we'll just destroy ourselves from the inside out until there's nothing left.
It's ridiculous.
Yeah, I mean, another thing too is, maybe some of your listeners don't know this, but if you go and look at the Federal Reserve's balance sheet, or just the size of what's called the monetary base of the Federal Reserve, that's just one measure of the amount of money that the Fed has created, you will see it rise quite sharply during every major military conflict.
And so, I mean, this thing that Ron Paul would talk about, and some people will, you know, say, oh, he's a nutjob, he's a conspiracy theorist.
I mean, you can see this amazing correlation between how much money the Fed creates and whether the U.S. government is currently engaged in a major war.
And so, you know, it's not some conspiracy theory that part of the function of getting that Fed and getting the central bank and having a printing press at its disposal was that it could command resources at the flick of a button rather than having to get the public to go along with it.
Because the point is, the amount of money they want to spend when they go to war now, they couldn't get either through explicit taxes or even getting people to voluntarily lend them the money.
They need the Fed there to create the money out of thin air, and then the Fed buys bonds in this complicated circle process where it looks like the government's just borrowing money, but really it's the Fed printing the money, and the Fed's the one who ends up holding the new treasury bonds.
Yeah, I think, well, you know, I've got to leave it to you and to Bob here, because really, but the best I can tell from piecing together what all I've learned from y'all and some other sources too, of course, only Korea is accepted.
All the wars have a big inflationary bubble to disguise their cost at the time, except Korea, apparently, they just did that on budget.
I don't know how exactly, what it was that they cut in order to afford it.
But then again, it only lasted like four years, right?
Yeah, I would need to look at the statistics on that one, but part of it could be it was so soon after World War II that actually, like, oh, this is kind of cheap, you know.
So who knows, compared to what World War II was.
Yeah, who knows, I probably ain't right anyway.
All right, well, listen, it's always great to talk to you, Bob.
You help me understand complicated things.
And one of these days, I'm going to sit down one weekend, I guess, and read Human Action, and then I'm going to interview you about it.
No, it's going to take me longer than that.
Yeah, it'll probably take longer than a weekend.
Yeah, yeah, I'm afraid so.
But one of these days, I'm going to start.
Okay.
All right, thanks, Bob, appreciate it.
Okay, thanks, bye-bye.
Everybody, that is the great Robert P. Murphy from the Mises Institute, Ludwig von Mises Institute, Mises.org, and you can find him there at MisesDaily, Mises.org/daily.
And, of course, his own blog is ConsultingByRPM.com.
Just Google Robert Murphy, you'll find it, ConsultingByRPM.com.
And go look at Amazon.com, and you can find his books, The Politically Incorrect Guide to Capitalism and The Politically Incorrect Guide to the Great Depression and the New Deal.
